Variable Costing Income Statement On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept: Sales (6,200 units) Cost of goods sold: Joplin Company Absorption Costing Income Statement For the Month Ended April 30 Cost of goods manufactured (7,068 units) Inventory, April 30 (868 units) Total cost of goods sold Gross profit Selling and administrative expenses Operating income $148,800 $120,156 (14,756) (105,400) $43,400 (24,010) $19,390 If the fixed manufacturing costs were $24,031.2 and the fixed selling and administrative expenses were $11,760, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. Joplin Company Variable Costing Income Statement For the Month Ended April 30 Amount Amount $ 148,800 Line Item Description Sales Variable cost of goods sold: Variable cost of goods manufactured Inventory, April 30 Total variable cost of goods sold 84,320 Manufacturing margin 64,480 Variable selling and administrative expenses 12,250 Contribution margin 52,230 Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income 11,760

Absorption and variable costing income statements for two months and analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 6,400 hats, of which 5,200 were sold. Operating data for the month are summarized as follows: During August, Head Gear Inc. manufactured 4,000 hats and sold 5,200 hats. Operating data for August are summarized as follows: Instructions 1. Using the absorption costing concept, prepare income statements for (a) July and (b) August. 2. Using the variable costing concept, prepare income statements for (a) July and (b) August. 3. A. Explain the reason for the differences in the amount of operating income in (1) and (2) for July. B. Explain the reason for the differences in the amount of operating income in (1) and (2) for August. 4. Based on your answers to (1) and (2), did Head Gear Inc. operate more profitably in July or in August? Explain.

Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.

Summarized data for Walrus Co. for its first year of operations are: A. Prepare an income statement under absorption costing B. Prepare an income statement under variable costing